Getting the right insurance as your company grows can be tricky. IE chatted with ERGO NEXT to find out more;
IE: ERGO NEXT’s research found that 43% of entrepreneurs wish they had understood their insurance coverage needs sooner. Why do so many business owners only discover these coverage gaps after they experience a problem?
Running a small business means constantly balancing competing priorities and responsibilities, oftentimes alone or with a small team. Most business owners don’t intentionally leave their business underinsured; they have to decide where to devote their limited time and resources and often choose to focus on other investments in the business. Data from ERGO NEXT’s Building Through Uncertainty series shows that they’re focusing on what they view as more immediate needs, like purchasing inventory or equipment (38%) or marketing efforts (36%) rather than preparing for risks they may perceive as unlikely. As a result, business owners often don’t uncover coverage gaps until an unexpected event exposes them.
At the same time, understanding what protection a business needs can be overwhelming, and the traditional insurance process hasn’t helped either. Buying coverage was traditionally a very lengthy and manual process, creating a perception that it was too difficult, complex and not always worth the hassle. That’s why we’re seeing 73% of business owners going underprotected.
The encouraging news is that the industry is changing. In recent years, the insurers have shifted to digital-first experiences that make the process easier to understand and more accessible, especially for a small business owner. This shift makes it simpler and faster for entrepreneurs to understand their risks and purchase the right coverage, ensuring the long-term success of their business.
IE; What are the biggest risks facing small business owners today, and how has that shifted over the last several years?
Over the last several years, the environment for small businesses has become even more uncertain and unpredictable. Inflation, ongoing supply chain disruptions and broader economic volatility have made it difficult for entrepreneurs to navigate risk and plan for the future. One area we’ve been seeing become more of a concern for small businesses is cyberattacks, and as bad actors use AI to launch more sophisticated attempts, attacks have increased 89% in 2025. That’s reflected in our data: when we asked SMBs what they’re most concerned about over the next 12 months, 46% said economic downturn/inflation and number two was a cyberattack or data breach (27%).
IE; Despite many entrepreneurs entering business expecting to face challenges, 40% said they were surprised by the risks they weren’t aware of. Are there certain areas where you are consistently seeing coverage lapses?
We don’t consistently see the same type of coverage lapses across small businesses. What we do see, though, is that as small businesses grow, their risks change, and many owners do not realize how their risk profile shifts, leaving them vulnerable.
Despite purchasing the right coverage when they first started their business, selling new products or even hiring new employees can change their coverage needs, and small business owners might not realize this. They often assume they are still covered, only to find out that their new product is not insured under their existing policy.
The good news is that entrepreneurs are learning from their experiences and making different decisions. Our research found that more than three-quarters of entrepreneurs (77%) say they’ve become more proactive at identifying and managing risks as their company has matured.
IE; One quarter of business owners said that they made personal purchases instead of paying for business insurance. What does this signal about how small businesses balance short-term financial pressures and long-term protection?
It’s becoming more expensive than ever to operate a small business, and as a result, 29% of entrepreneurs say balancing business demands with their personal life is a top source of stress. Margins are tight, so it often becomes an unfortunate game of “what can wait, and what is dire?” So, when an SMB is faced with a medical bill versus purchasing insurance for their business, they have to weigh what is most important at that moment.
The challenge is that many entrepreneurs underestimate how important insurance protection is to their long-term success. Because they aren’t insurance experts, they make the best decisions they can with the information they have, but these short-term choices can leave them exposed when something unexpected happens.
Our research shows that 43% of entrepreneurs wish they had understood their insurance coverage needs sooner. As the line between personal and business finances continues to blur, having the right business protection becomes even more important to protect their business and personal assets.
IE; What was one finding that stood out most to you, and how does it shape how you think about insuring small businesses?
What really stood out to me was the contrast between business owners’ concern and optimism. While one-third of small business owners worry about closure weekly, half are still confident they will be in business in five years. That resilience is encouraging, but it also reinforces the importance of helping entrepreneurs understand their evolving risks so they can continue growing with that confidence.
That’s why we’re so focused on making the insurance process understandable and accessible through digital elements that can fit into the day-to-day life of an entrepreneur. They aren’t insurance experts, nor should they be. Our role as providers is to create experiences that make it easier, not more complicated, to get protected.
We’ve done this in several ways. For example, we have a mobile application that allows SMBs to access and adjust their plans 24/7 so their coverage is as agile as they are. We’ve also added familiar payment options like Apple Pay, which helps make purchasing insurance feel simple and intuitive, like other purchases they make every day. And, we’re integrating with platforms like Amazon and TikTok Shop, so SMBs have one less place to go to purchase protection.
Ultimately, the findings from our Building Through Uncertainty series highlight a lot of progress toward a more informed small business owner, but also reinforce the continued need to rethink the insurance process to best serve entrepreneurs.
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